Correction? Close Enough!

Wednesday night on the CBS Evening News, Katie Couric, no financial wunderkind herself, posed the question of whether the market was in a correction to one of her crack business reporters. The answer was, "no, not yet," as though the magic 10% figure would send some all clear signal for investors to resume buying stocks.

While we are not technically in a correction - which is a 10% decline in the market - we are certainly close. From the high of 14,280 (intraday) on the Dow, a correction would necessitate a loss of 1,428 points. At the close today, the Dow has only lost 1,237 points, or roughly 9%. What makes the argument all the more interesting, is that the Dow - and most other major indices - dropped significant amounts at the close and ended near the lows of the day. The Dow itself, in an unusual reversal of fortune, lost over 150 points in the final 40 minutes of trading.

Dow 13,042.74 -223.55; NASDAQ 2,627.94 -68.06; S&P 500 1,453.70 -21.07; NYSE Composite 9,733.34 Down 144.13

In case you haven't gotten the memo, owning stocks this week was not in your best interests.

For points of reference, let's just take this month. Since October 31 the Dow has dropped nearly 900 points. The NASDAQ lost 232 points over the same span. It's not very pretty, and the culprits are the same: sub-prime mortgages, credit disruptions, falling dollar, higher oil.

The US economy is pretty much kaput. We've binged for too long and now it's time to pay the piper. I reiterate my statement that bank failures are a distinct possibility. And not just any bank, banks like Citibank, Bank of America, Chase, and others are on the hook for literally hundreds of billions in bad loans. That is exacerbating the credit crunch. Banks are just not loaning out any money unless your credit is absolutely perfect. They've been burned - by themselves - and they're scared stiff. So should you be.

Advancing issues were overwhelmed by decliners by a 5-2 margin and new lows continued to ratchet up to 742, while new highs sunk to a 3 1/2-month low of 85. There aren't a lot of success stories out there. If your holdings managed only a 5% loss since August, consider yourself either smart or lucky. However, this is only the first leg down. We haven't even sunk to the August lows (12,800 on the Dow) yet, though we're closing in on them quickly.

Commodities were mixed. Oil ended the week at the absurd level of $96.32 per barrel, ahead 86 cents on Friday. Gold lost $2.80 to $834.70, while silver gained 3 cents to $15.55. It wasn't a month ago that I said silver was a buy at under $13.50. Boy, was I right!

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There may be a technical bounce next week, as stocks have taken quite a hit over the past seven sessions and are oversold. Don't be a bargain hunter here, though, as gains will be quickly wiped out before Christmas. There's an equal possibility that the selling will continue, though, without much of a respite. Monday, in particular, could be a bloodbath.

Volume was high once again. Even the not-so-smart money is getting out of US stocks. If you haven't already, it's still not too late.

NYSE Volume 4,587,501,500
NASDAQ Volume 3,004,066,500